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Editorial: Interesting agri, commerce experiment

Published:Thursday | March 10, 2016 | 3:00 AM
Karl Samuda, Minister of Industry, Commerce and Agriculture.

Andrew Holness' placing of industry and agriculture under the same ministerial management is an interesting experiment of understandable logic which, if it works, could be transformational for both sectors and a boon to Jamaica's economy.

According to Prime Minister Holness, the strategy is to "accelerate vertical integration of agricultural into commercial activity", which is something about which Jamaican governments have talked about for decades, with relatively little being accomplished. Which is why the administration's new approach should be given a chance. But to improve the chances of success, the new minister, Karl Samuda, we suggest, should also be paying close attention to what is happening in tourism and work in concert with that sector's portfolio minister, Edmund Bartlett.

There are several reasons that lend credibility to a new attempt at doing things differently, not least of which agriculture is the country's biggest employer, with a workforce of over 200,000, mostly in poor, rural communities. A thriving farm sector, in which people can make a decent living, will not only help to address the problem of deepening rural poverty, but slow, and perhaps halt, the rural-urban drift and the social problems attendant thereto.

Yet, for the number of employers, agriculture, inclusive of traditional crops such as sugar, coffee and bananas accounts for only around seven per cent of Jamaica's annual national output and the country is far from self-sufficient in food. The food import bill is close to US$900 million a year, of which analysts believe could be substituted with either alternatives and/or domestic production. That, on the face of it, would be annual savings of around J$28 billion.

But extracting this value demands more than primary production and merely selling cash crops in the island's markets. It requires value-added production.

 

IMPROVED EFFICIENCY

Indeed, less than 40 per cent of Jamaica's agricultural output is subject to any further processing, compared to nearly 60 per cent in Costa Rica, a country that is geographically close and with many of the characteristics of Jamaica. When value added/substantial transformation from further processing is taken into account, agriculture/agri-food's contribution to Jamaica's gross domestic product (GDP) rises to around 11 per cent, or half Costa Rica's.

There are real examples of the positive consequences when these kinds of conversion take place, such a recent move by producers of Red Stripe beer to substitute, at a lower cost, starch from cassava for the barley previously used in its lager. This improved efficiency contributed to the company's decision to repatriate to Jamaica the production of its beer for the North American market, which will mean the creation of scores of jobs.

The tourism sector is another area where Mr Samuda can look to maximise such linkages, advancing an initiative of the previous administration. In this regard, he will have the benefit of a recently completed study for the tourism ministry which placed the sector's annual import bill for manufactured and agricultural goods at around J$70 billion, of which up to $5 billion was farm produce.

That report goes into granular detail about the products required as well as, broadly, supply chain via which they are acquired. This should be a useful tool, especially with the plan for the construction of up to 10,000 new hold rooms in Jamaica in the near to medium term.